7 serious themes shaking up travel and hospitality

Sep 21, 2016

In a week where the Marriott-Starwood deal concludes and Amazon Alexa forays into the UK with Skyscanner integrated as its flight search engine, we consider some other big picture trends

Mega acquisitions, new distribution channels, driving loyalty, pricing dilemmas, the rise of ‘super host’ and building revenue from tours and activities are just some of themes to emerge from interviews and research in the run up to EyeforTravel, North America next month. Here we outline seven of those trends which we will be analysing more closely in the coming weeks.

1. Competition continues to drive consolidation

In this fluid and competitive environment, firms are looking for ways to fill gaps in their armour through mergers, acquisitions or partnerships. This week’s big news is that the Chinese Ministry of Commerce has finally given Marriott and Starwood the nod to conclude this hotel mega-deal before the market opens this Friday. Perhaps not on the same scale, but an interesting move nevertheless, last week travel and expense management platform Concur announced that it would acquire travel search start up Hipmunk. Though numbers aren’t being disclosed what is clear is that Concur, which has also invested in TripIt, ExpenseIt and Cleartrip, is looking to improve its search functionality and the customer experience. In Atlanta, future consolidation of the industry will be a core theme and the biggest question of all remains unanswered - could June rumours of a tie up between Priceline and TripAdvisor be the last frontier? What will Todd Henrich, SVP Corporate Development, Priceline and Ed Lang, Director - Corporate & Business Development, Tripadvisor have to say in their keynote address next month?

2. Distribution – never a dull moment

Travel and hospitality brands continue to grapple with how best to distribute their products and services. With the rising number of distribution channels including app, voice and virtual assistants, deciding which to align with remains sharply in focus. This week Amazon announced the launch of Echo in the UK, and we heard today that it has chosen Skyscanner as its first partner in flight search for devices in the UK. In an interview earlier this month, Shane Corstorphine, GM Americas, Skyscanner pointed to the fast-changing role of metasearch. He sees this “as a platform, where thousands of partners can come in [aka Amazon], rather than as an intermediary comparison site that arbitrages between Google or some other distribution channel and the partner”. In this open APIs, data analytics and white label solutions will all play an important role. With Expedia too considering an IPO for Trivago, in which it owns a 61% stake, this further cements that metasearch is a force to be reckoned with but is it anything more than OTA in disguise? Christen Garb, Hyatt’s VP RM, says it’s not about trying to beat the OTAs but about finding great partnerships; it’s also about fine-tuning your pricing strategy.

3. The hotel of the future is not what you think it is

Executives in the hospitality sector, threatened by rapid gains made in the alternative lodgings space by players like Airbnb and Wimdu, are beginning to wonder what the 21st century hotel company might look like. Utpal Kaul, Head Global Tech Partnerships at tech firm BookingPal, believes that there is an opportunity for hotels to leverage their knowledge and expertise more widely in the management of vacation rentals or alternative lodgings. This, he argues, "is a way for hotels to dramatically decrease the cost of acquiring inventory in what is otherwise a capital-intensive business". Hotels are already recognising this opportunity. Choice Hotels already links to vacation rentals on its site, and AccorHotels snapping up high-end vacation rentals player Onefinestay for $169m is another example of how this trend is playing out.

...there is an opportunity for hotels to leverage their knowledge and expertise more widely in the management of vacation rentals or alternative lodgings

Utpal Kaul, Head Global Tech Partnerships, Bookingpal

4. Loyalty – ‘strange’ things are happening

How you drive loyalty and keep customers loyal is another perplexing issue. All the big chains have been investing aggressively in their loyalty programmes but then in a rather disruptive, some would even argue dangerous, move, US-based Red Lion handed over its member rates to Expedia in exchange for customer insight, and probably much lower commissions. Less controversial, but interesting nevertheless, is Marriott’s affiliate deal with Expedia to bundle flights, ground transportation and so on into its loyalty programme. What’s clear here is that Marriott is be more flexible, innovative and personal, an approach the experts strongly advocate. Hotels may do well to look to how airlines are approaching loyalty; SouthWest Rapid Rewards and Flying Blue are two notable examples.

Hooking the customer in an increasingly competitive and commoditised world is another focus of travel brands. In Atlanta, Club Med’s Alicia Javelon, Head Content & Product Marketing, will outline some of the ways that they are beating the competition using 360° video, infographics, social contests and user-generated content to create visually disrupting and compelling content. In a bold brand revamp, Alaska Airlines is another that is taking the power of video a step further to reposition itself in the eye of the consumer. In another storytelling move, the airline launched a microsite to introduce a broader audience to the airline. Sangita Woerner, VP Marketing, says Alaska has delivered “real transformation of the way flyers interact with the brand'.

6. The rise of the 'super host'

Airbnb has come a long way since launching with an offer of an airbed and breakfast in the loft apartment of one of its founders. Today young and old use Airbnb for both leisure and business, and its growth by any metric has been extraordinary. According to a survey earlier this year by the Cowen Group, a financial services firm, room nights booked will rise from 79 million this year to a billion by 2025. Now, arguably spurred by growth in business travel, Airbnb has announced that it will test a new feature where its ‘super hosts’ can offer property management services to other hosts for an agreed fee. This, by it’s own admission, ‘de facto positions Airbnb against the many property management companies - like Airsorted, Hostmaker or BNBsitter - that have recently been surfacing in different cities…’ So far, this new Airbnb feature seems to be limited to Tokyo so the race is on. Just for the record, this week Hostmaker, which has been named one of five fast-growing British businesses to watch in 2016, closed a new $1.1m funding round.

7. Tours & activities: driving ancillary revenue to the edge

'Becoming the travellers’ companion' is what it says on the tin, but it’s really a concerted push to drive ancillary revenue from tours and activities. In this space, there is plenty afoot. TripAdvisor and Viator recently announced the launch of an enhanced attractions content solution for travel partners and hospitality providers; essentially this will make it easier for travellers to book attractions in destination from their mobile device. If you think Google has missed a trick, think again; in its bid a ‘personalised tour guide in your pocket’ it has launched Google Trips, an iOS and Android app, which pulls in a combination of data from Google Maps and crowdsourced contributions from other travellers. Also moving into this space is Airbnb, which recently announced the acquisition of Barcelona-based Trip4Real; this follows the recent brief outing of an ‘Airbnb trips’ app. So travel executives are actively testing the water for tours & activities in a bid to drive fresh revenues.

Time is running out and spaces are limited. Join us in Atlanta (October 6-7) for EyeforTravel North America to hear the latest trends and tricks of the trade from brands including TripAdvisor, Priceline, Hyatt, Viator, Skyscanner, Alaska Airlines, Club Med and more